The Global Fertility Crisis Is Worse Than You Think

In the following excerpt, Derek and Jesús Fernández-Villaverde define some of the key terms in the fertility rate discussion and examine why the population has not already started to decline.

Derek Thompson: At the conclusion of a recent lecture that you gave at the University of Miami, you said this: “Only two things are important right now in life: fertility and deep learning. Everything else is noise. Once you start thinking about these, it’s hard to start thinking about anything else.” I want to hold off on deep learning and AI for the time being and focus on fertility for the first 90, 95 percent of this show. Tell me, at the grandest historical scale, why is fertility important?

Jesús Fernández-Villaverde: Because demographics is destiny. And the number of children that are born today will determine how our society will look like in 30, 40 years. And we have evidence from the last 10,000 years, 20,000 years in economic history that at the end of the day, this is really the only thing that matters.

And what I emphasized in Miami was that 2023 was a unique year in the history of humanity because it’s the first time in our history where our total fertility rate as a planet—I’m not talking about the U.S.; I’m not talking about economies; I’m talking about all human beings on the planet—fell below replacement rate. And we can talk a little bit about what that means exactly, but that has never happened before in 50,000 years, in 200,000 years.

And that basically means that the world population will peak in another 30 years or so if the trend continues. And we are going to enter into a whole new world that is going to lead to a tremendous amount of social reorganization. Some things can be good; some things will not be so good. And a lot of the things that we discuss in the day-to-day in politics, politics look like they are not about fertility, but they are actually about fertility if you think about them a little bit more carefully.

Thompson: Well, I definitely want you to give me some examples of that as we get to the implications part of the show. But before we do, I want to make sure we ground this discussion of what exactly is happening. Tell me a little bit about what “replacement level” means and what “total fertility rate” means.

Fernández-Villaverde: OK. So let’s start with replacement, which is the easiest one. Imagine that you have a population. Let’s say we have 1 million people in that population. How many children need to be born for that population to be constant at 1 million in the long run? Well, it turns out to be the case that for every woman in that population, you need 2.1 kids. And why is it 2.1 and not 2? Well, because of two reasons.

And the first one is that there are a little bit more boys born than girls, around 105 [boys for every 100 girls] if you don’t do anything like selective abortions. And second, because not all the girls that are born will move on to become mothers themselves. They will die of accidents or some other reasons before they enter into their fertile ages. So basically, you need that every woman will have 2.1 kids on average to keep population constant over time. That’s the replacement rate.

The total fertility rate is an estimate of: How many children will women have in a given population? So when we look at the U.S. right now, the fertility rate in the U.S. is around 1.57. That means that the average American woman right now is having 1.57 kids. Because replacement rate is 2.1, a way to think about it is that we have a shortfall of slightly over 0.5 kids.

Now, there is a subtlety over here, which is important, and I want the audience to understand: Total fertility rate is an estimate. It’s slightly different from what we call “completed fertility.” So completed fertility is I actually go back to women that are already 50 years old, and I see how many kids they actually had. The problem with completed fertility, which is what we really care about in the very long run, is that by definition, it takes decades before we can compute it. So if we are going to make any type of forecast about the future, we cannot rely on completed fertility. Although hopefully, today, I will try to warn the audience where completed fertility may be pointing out to slightly different conclusions than total fertility rate.

Thompson: Two real, extraordinary factoids from your speech in Miami: number one, that 2023 was the first year where total fertility rate fell below the replacement rate for the first time in 50,000 years, 100,000 years of human history. 2023 is remarkable. Number two is that you argued that “peak child” might already be behind us.

Fernández-Villaverde: Yes.

Thompson: I want you to explain what that means and why, if peak child is already behind us, the global population isn’t already falling right now.

Fernández-Villaverde: OK. So let me start with the second, and then I come back to the first. There is something that in demography is called momentum. So momentum means that the population will keep growing from around 15 to 30 years—depends on the details of the situation—after you fall below replacement rate.

So let me give you a very simple example. Imagine that you have a spouse, and you only have one kid. So you are below replacement rate, but you are two, you have two parents, your spouse has two parents. So you are not replacing yourselves, but your parents have not died yet. So the fact that you have one kid still increases the population, but the problem is when your parents die, then we have not replaced them.

So basically, what happens was during the 1980s, 1990s, a lot of women were born on the planet. They had their kids in the 2010s, and that’s why the population is still growing. The grandparents of these girls have not died yet. What will happen is that when these grandparents, when the generation of people born in the 1950s, 1960s start dying, then is when the population goes down.

So the analogue I love to use is: Think about a gigantic oil tanker. When you start changing the direction of the oil tanker, it actually has so much momentum that it takes a little bit of time before it turns, but it is already cooked in. It is already the case that the number of children on the planet has been going down since around the year 2012. It’s just that their grandparents have not died yet. Nothing else than that.

And then the first point about we are below replacement rate, yes. So as a planet, we are not producing enough kids to keep the population constant. Now, of course, there are countries like the U.S. and Western Europe for which we have very, very good data. There are countries in Sub-Saharan Africa where the data is not so good, so all of this is done with some degree of uncertainty.

I’m pretty sure that this is the case, that it was 2023, but it may be the case that in 10 years, when we have slightly better data, it may have been 2022, or it may have been 2024. But the big picture, it doesn’t really change if it is one year up or another. And everything that we observe is that fertility on the planet is continuing going down very fast. So 2024, the fertility was below 2023, and 2025, it was below 2024. And my educated forecast is that we are going to continue seeing this drop in fertility for the next 20, 30 years, nearly for sure.

This excerpt has been edited and condensed.

Host: Derek Thompson
Guest: Jesús Fernández-Villaverde
Producer: Devon Baroldi
Additional Production Support: Ben Glicksman